The alternative payment method industry (APM) is expanding to meet the needs of businesses around the world, especially in emerging markets.
The potential of emerging markets
Growth opportunities
Emerging-market societies have larger numbers of unbanked people compared to developed countries. This is why many citizens there are turning to alternative payment service providers, resulting in vast room for revenue growth and expansion.
More flexibility
Because emerging economies are less saturated, PSPs are poised to offer a greater variety of payment solutions. This applies not only to new payment methods, but also to ever-growing product offerings which may be better served outside of legacy payment systems.
Rising demand
Emerging markets often have rising middle classes which result in greater consumer demand. What’s more, many emerging markets are made up of predominantly younger populations who are quickly becoming consumers, small business owners, and retail financial investors.
Developing tech
More developed markets, being early adopters, are hampered by having to update old technology. Emerging markets can leapfrog to the latest tech, meaning consumers and businesses are better positioned to adopt brand new payment technologies.
World integration
As globalization increases geo-specific payment needs, emerging societies will want access to world markets. Increased demand for international goods, or plans to sell to consumers across borders, make such markets ripe for PSPs to step in and fulfil these growing needs.
Defining emerging markets
Emerging markets are often:
- Developmentally transitioning societies that do not yet have rigid market practices
- Undergoing industrialization in areas like finance, logistics and telecommunications
- Dominated by younger people eager to start businesses and consume global products
Challenges of emerging markets
Lack of infrastructure
Technical integration is difficult in emerging markets because payment solutions function on the back of legacy infrastructure, especially for digital payments that require reliable connectivity.
Currency volatility
Foreign exchange rates can fluctuate erratically in developing economies, which requires added functionality and oversight, particularly when offering cross-border payments.
Regulatory issues
Foreign companies in emerging markets must remain compliant with local laws. Not only regarding high-risk payment solutions, but also for data protection and foreign investment rules.
Scalability
Emerging economies are rapid growers. Your operations must be readily scalable so that you can handle higher numbers of orders and transactions with minimal delays.
Step-by-step guide for entering emerging markets
Master plan: The process begins in your HQ. Map out business goals and set interim objectives. Figure out optimal markets and which local partnerships to leverage.
Infrastructure research: Get familiar with the local systems for energy, telecommunications and legacy banking. Determine what you’ll depend on and where you might need to develop your own systems.
Learn about the culture: What are the preferred payment methods of locals, and what commodity categories are common purchases for alternative payment transactions.
Find a partner: Make your local PSP part of your team. Foster liaisons with partners who’ll navigate compliance issues and assist with cultural and language barriers.
Prepare options: There are many forms of APMs: direct transfers, mobile and e-wallets, BNPLs, prepaid vouchers. Offer a robust selection of services geared to that market.
Payment strategies in high-risk industries
High-risk payment services are increasingly transacted with APMs in developing countries in Latin America, Southeast Asia, Eastern Europe, Africa and the Middle East.
Contact Centrobill to learn more about bespoke solutions for high-risk businesses in these emerging markets.
